Alternative Market Scenarios Research Articles

Simulating trends in housing wealth inequality in post-socialist Czech society

The goal of this paper is to predict, by using microsimulation modelling under alternative market scenarios, housing wealth inequality in Czech society up to the year 2050. These predictions can be useful for assessing the rationale for attempts to use housing assets as a way of supplementing state pensions; and thus add to existing studies on asset-based welfare (ABW) that focused only on the recent and past situation. The models predicted small increase in housing wealth inequality among the future elderly but larger increases in inequality in the society as a whole. Rise in wealth inequality was especially steep when consumption of housing assets by future elderly was accompanied by an interruption of financial transfers to the next generations. Reduction of intergenerational transfers may thus significantly enhance wealth inequality in a society and thus pose a risk to social peace. We showed that similar outcome may appear in broader number of countries, including those with much lower homeownership rate.

Investigating Impacts of Alternative Crop Market Scenarios on Land Use Change with an Agent-Based Model

We developed an agent-based model (ABM) to simulate farmers’ decisions on crop type and fertilizer application in response to commodity and biofuel crop prices. Farm profit maximization constrained by farmers’ profit expectations for land committed to biofuel crop production was used as the decision rule. Empirical parameters characterizing farmers’ profit expectations were derived from an agricultural landowners and operators survey and integrated in the ABM. The integration of crop production cost models and the survey information in the ABM is critical to producing simulations that can provide realistic insights into agricultural land use planning and policy making. Model simulations were run with historical market prices and alternative market scenarios for corn price, soybean to corn price ratio, switchgrass price, and switchgrass to corn stover ratio. The results of the comparison between simulated cropland percentage and crop rotations with satellite-based land cover data suggest that farmers may be underestimating the effects that continuous corn production has on yields. The simulation results for alternative market scenarios based on a survey of agricultural land owners and operators in the Clear Creek Watershed in eastern Iowa show that farmers see cellulosic biofuel feedstock production in the form of perennial grasses or corn stover as a more risky enterprise than their current crop production systems, likely because of market and production risks and lock in effects. As a result farmers do not follow a simple farm-profit maximization rule.

Measuring the impact of market coupling on the Italian electricity market

This paper evaluates the impact on the Italian electricity market of replacing the current explicit auction mechanism with market coupling. Maximising the use of the cross-border interconnection capacity, market coupling increases the level of market integration and facilitates the access to low-cost generation by consumers located in high-cost generation countries. Thus, it is expected that a high-priced area such as Italy could greatly benefit from the introduction of this mechanism. In this paper, the welfare benefits are estimated for 2012 under alternative market scenarios, employing the optimal dispatch model ELFO++. The results of the simulations suggest that the improvement in social surplus is likely to be significant, especially when market fundamentals are tight.

To anticipate the future, models simulate US. pistachio prices

Models developed on U.S. pistachio production simulate grower prices under scenarios of varying import levels and carryover stocks. Grower prices have significantly varied for 13 years, partly because of changes in import levels and domestic production. Bearing acreage has increased dramatically, and as nonbearing acreages mature, substantial growth in production is expected. In 1979, the fledgling U.S. pistachio industry produced 1,000 tons; in 1990, production was more than 58,000 tons. Anticipating future grower prices under alternative market scenarios is of interest, particularly as global political conditions change.

Designing International Transfer Pricing Systems

Two companion articles have considered transfer pricing objectives and factors influencing the designing of these systems. This article, the last in the series, treats the topic of designing transfer pricing systems. Since many multinational firms have subsidiaries in the U.S., it is worthwhile to consider the U.S. Internal Revenue Service regulations regarding transfer pricing. Transfer pricing systems can be designed under a variety of alternative market scenarios. These topics are discussed in the first two sections of the article. The designing of profit‐oriented and cost‐oriented transfer pricing systems are considered in the next two sections. A mention of methods for selecting transfer pricing systems concludes the article.